Cohabitation - Separation and Death

Cohabitation and death

When one member of a cohabiting couple dies, it can come as an unpleasant surprise to the bereaved partner to discover that not all of their late partner’s estate will pass to them in the absence of a will. It is only when this happens that many people become aware that there is no such thing in law as a ‘common law’ spouse, so it is important that people living together give thought to protecting their position by the means currently available to them. 

Where there are assets which are jointly held (as ‘joint tenants’ in legal terminology), these will pass by survivorship to the other partner. Property held jointly and joint bank accounts are normally held in this way. Also, if there is a life assurance policy or there are pension benefits payable to a nominated person, then the surviving partner will receive these if they are the named beneficiary.

Once such assets have been dealt with, however, the rules of intestacy apply if there is no will. An intestate estate passes (with a rather complex formula regarding its division depending on the size of the estate) to the relatives of the deceased. This will normally leave the deceased’s partner with nothing.  However, the law does allow a claim for provision to be made from the estate of the deceased by dependents if they are persons for whom the intestate person might reasonably have been expected to make provision.

A surviving cohabitee can make a claim if the deceased died intestate or failed to provide for them in the will, if:

• they were maintained by the deceased in whole or in part immediately before the death of the deceased; or
• for two years prior to the death of the deceased they lived in the same household as the deceased as if they were the husband, wife or civil partner of the deceased.

In such cases the court may be requested to make ‘reasonable provision’ for the applicant. There are a series of guidelines which have been set to ensure that the provision made is fair, bearing in mind the size of the estate and the circumstances of those with an interest in it.

The court’s powers to divide the estate are considerable and can include making orders for periodical payments or lump sums or the transfer of specific property to the claimant. However, it should be remembered that transfers on death to a cohabitee do not qualify for the ‘spouse’ exemption from Inheritance Tax which applies to transfers to a spouse or civil partner.

Cohabitation and separation

Similarly if cohabitees separate it can prove to be a very expensive process to establish which assets belong to each party.  The courts do not have the power given to them when it comes to the division of a divorcing couple.  Had the couple gone into the relationship with a cohabitation agreement already drawn up this could save an awful lot of money and negotiation should they later separate.

What the cohabitation agreement contains

Like any contract, it should state who it is between, how long it is intended to last and that it is intended to be legally binding. If there are assets (e.g. your home) which are to be dealt with in a particular way, these should be specifically mentioned and details provided as to how they are to be dealt with on death or on break-up of the relationship. It is not uncommon for a couple to sell one of their properties when they move in together, with the property they live in being retained in the name of the original purchaser. In such cases, it is sensible to decide if the non-owning spouse’s contribution is to be treated, for example, as a loan or if they are entitled to a percentage of the property value.

The ownership of all significant assets – bank accounts, insurances, specific valuables etc. – should be considered. Details of income and expense sharing arrangements should be included if possible and if there is the intention that one partner should support the other, this should also be mentioned, as should any financial arrangements regarding family members.

Wills and cohabitation

It is obvious that a cohabitation agreement is normally best considered in tandem with your will.  Tax planning and other issues need to be considered – for example, you might think about writing any death in service benefits or insurances in trust for your partner.  To conclude, if you are a cohabiting couple you must prepare wills protecting each other should one party die.  You should also consider preparing a cohabitation agreement.

CWJ have a breadth of experience in assisting cohabiting couples and we can offer discounted rates should you wish to prepare all the documents at the same time.

For further information or advice relating to this article please contact Jeremy Groeger-Wilson on 01689 887847 or by email at Jeremy.groegerwilson@cwj.co.uk